---
kind: "section"
citation: "26 U.S.C. § 3505"
title: "26"
title_heading: "Internal Revenue Code"
number: "3505"
heading: "Liability of third parties paying or providing for wages"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/3505"
units:
  - "Subtitle C — Employment Taxes"
  - "Chapter 25 — General Provisions Relating to Employment Taxes"
---

# §3505. Liability of third parties paying or providing for wages

- (a) **Direct payment by third parties—** For purposes of sections [3102](/usc/26/3102.md), [3202](/usc/26/3202.md), [3402](/usc/26/3402.md), and [3403](/usc/26/3403.md), if a lender, surety, or other person, who is not an [employer](/usc/26/3231.md?p=a) under such sections with respect to an [employee](/usc/26/3121.md?p=d) or group of [employees](/usc/26/3121.md?p=d), pays [wages](/usc/26/3121.md?p=a) directly to such an [employee](/usc/26/3121.md?p=d) or group of [employees](/usc/26/3121.md?p=d), employed by one or more [employers](/usc/26/3231.md?p=a), or to an agent on behalf of such [employee](/usc/26/3121.md?p=d) or [employees](/usc/26/3121.md?p=d), such lender, surety, or other person shall be liable in his own person and estate to the [United States](/usc/26/3121.md?p=e-2) in a sum equal to the taxes (together with interest) required to be deducted and withheld from such [wages](/usc/26/3121.md?p=a) by such [employer](/usc/26/3231.md?p=a).
- (b) **Personal liability where funds are supplied—** If a lender, surety, or other person supplies funds to or for the account of an [employer](/usc/26/3231.md?p=a) for the specific purpose of paying [wages](/usc/26/3121.md?p=a) of the [employees](/usc/26/3121.md?p=d) of such [employer](/usc/26/3231.md?p=a), with actual notice or knowledge (within the meaning of [section 6323(i)(1)](/usc/26/6323.md?p=i-1)) that such [employer](/usc/26/3231.md?p=a) does not intend to or will not be able to make timely payment or deposit of the amounts of tax required by this subtitle to be deducted and withheld by such [employer](/usc/26/3231.md?p=a) from such [wages](/usc/26/3121.md?p=a), such lender, surety, or other person shall be liable in his own person and estate to the [United States](/usc/26/3121.md?p=e-2) in a sum equal to the taxes (together with interest) which are not paid over to the [United States](/usc/26/3121.md?p=e-2) by such [employer](/usc/26/3231.md?p=a) with respect to such [wages](/usc/26/3121.md?p=a). However, the liability of such lender, surety, or other person shall be limited to an amount equal to 25 percent of the amount so supplied to or for the account of such [employer](/usc/26/3231.md?p=a) for such purpose.
- (c) **Effect of payment—** Any amounts paid to the [United States](/usc/26/3121.md?p=e-2) pursuant to this section shall be credited against the liability of the [employer](/usc/26/3231.md?p=a).

## Source credit

(Added Pub. L. 89–719, title I, § 105(a), Nov. 2, 1966, 80 Stat. 1138.)

## Notes

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable only with respect to wages paid on or after Jan. 1, 1967, see section 114(c)(1) of Pub. L. 89–719, set out as an Effective Date of 1966 Amendment note under section 6323 of this title.